State of the Media

Listen to me. I am lying right now.

Chris Edwards posted something really incredible today ... a disclaimer from A PR COMPANY ON A NEWS RELEASE!

What does this mean? It means that this agency hasn't read the release, has done no research, hasn't asked questions about the content of the release, doesn't even have an agreement with the client with a liability clause to protect them from lawsuits related to false statements in the release. It means they are taking money for just throwing stuff out there on the Internet.

This is what corporate marketing wants?

Forget about government economic policies. Forget about war. Forget about stupid lending practices. Those things didn't cause our current economic slump. The customers can't buy anything because they are too busy throwing up after reading Yahoo! News.

Jon Carroll pipes up

One of my favorite writers in the world, Jon Carroll of the SF Chronicle, wrote a contrarian view of the health of newspapers today. And one graf lower in the column highlights Loring Wirbel's comment from yesterday.

"Newspapers are the original aggregators; Web sites mostly just aggregate what the newspapers have already aggregated, plus opinion. Opinion is useful, sometimes funny, sometimes incisive, but it ain't no good without data. Newspapers are the fountainhead of data. We do the necessary job - well, not me, but real journalists. And we do it because we are trained to do it. We have, dare I say it, standards."

I think he makes a good point. The journalism business is changing. It's not the way it used to be, but it isn't going away anytime soon.

Wisdom and Ignorance, Part 9: The coming golden age of journalism

Over the past few months I've gone over the historical issues that created the free media in the US and now the world, the events and decisions that brought us to where we are today, and made some suggestions about how industry and media should learn to work together. In the process, I've beaten up on some specific industries, gotten involved with arguments from Big Business advocates and seen this blog grow to the point of journalistic legitimacy... whatever that means. It's been a great time.

But in this final segment of the series, I want to turn specifically to my media brethren and make some suggestions about what they should do to help restore the symbiotic relationship between business and media.

This morning I heard that CBS – the Tiffany Network, the organization that defined broadcast news for most of the last century – is outsourcing a large portion of its news gathering to CNN. Once again current events sets the stage for my post.

There are many people that would bemoan this relationship as an indication of the death of the media, while others call it the continuing consolidation. Paul Miller touched on that today by calling for fewer publications, but I'm not sure that's really the point. I think the CBS move is a good one because it shows that media, to be relevant, needs to be cooperative.

The journalism paradigm for more than 200 years has been not only adversarial for its subjects, but to each other. The goal was to create unique content; to scoop competitive news media on information, thereby demonstrating why someone should read your paper or watch or listen your broadcast. The Internet has changed all that. Information, pseudo-information and outright lies are spread almost instantaneously through out the world now. Getting your viewpoint out to the masses is easier than ever. Journalists need to learn that getting out first means nothing. What is more important is getting correct information out, properly vetted and considered. That means it may not come from one journalist, but many.
That's the biggest change media needs to learn. Journalists need to cooperate with each other, regardless of what publication or medium they work for. Media houses need to not only allow that kind of collaboration, then need to encourage it. That means journalists are going to have to become a REAL profession and just not claim it.

I can't count how many times I've heard representatives from every news media company bad mouth the competition, the worst being United Business Media and Reed Business editorial. That can be expected from the business side of those organizations, but it is unprofessional from the journalists. Writers and editors from every form of media should be sharing their information, balancing each other for the purpose of creating considered, thoughtful communication that the audience can trust. Bloggers internal and external to industry, who seek the trust of their audience, should participate in the collaboration to make sure that what they are about to share is accurate, even if it only to a degree.

Part of this can be accomplished by adhering to the principals and ethics established by organizations like PRSA and the Society of Professional Journalists. As I pointed out a few months ago, very few practitioners on either side were even aware those principals exist. And that takes me to my next point.

Communicators who seek to be considered professional need to act like professionals. Any idiot can sign up for a blog on Google. It takes someone with training in communications to make that blog valuable. As much as I appreciate the concepts published by David Scott Meerman one thing he only touches on is that using new media to promote your company doesn't do any good unless you know how to communicate. And there are just not enough trained communicators for every company to have one.

Many companies are retreating behind wall fortresses, pushing employees to establish blogs that speak only to their current customer base. But the efforts are hollow because they don't encourage real discussion. Journalists know how to create interest and uncover bullshit. That's why they need to stay independent.
But media companies need to let their communicators have the freedom to work outside their own fortress and build stories with the help of all their compatriots. It's time for a real "fourth estate" of professionals. This is not the end of journalism as we know it. This could be the golden age.

We'll be back with our regular program of interviews with media players in the next few weeks. Thanks to everyone for their support and encouragement.

Wisdom and ignorance, Part 8: Hang together of hang separately.

It's rough out there. I'm not telling you anything you don't already know. But waiting for everything to come back the way it was is certain catastrophe.

Let me remind you of the way it was as little as 10 years ago. Media was in the ascendancy with the popularity of the web, investment money flowing, Big Business doing the heavy lifting in subsidizing the market and getting the benefit of start-ups doing the R&D. Everyone was getting rich.

Then Big Business believed it's own press and said: why do we need the media or even these annoying little start-ups? Some smart people started asking when was the internet actually going to make money? Not so smart people started looking for subprime loans to refinance their over valuated homes. Media companies started laying off staff as ad revenue dried up.

As magazines and website media went out of business. Investors no longer had an objective, third-party view of the start-ups and stopped investing in whole segments. Big Business started pricing out the start-ups, driving down evaluations and buying the small companies at pennies on the dollar.

That's where we are today. The economic ecology is unraveled and most everyone is waiting for someone to put it back the way it was…. except for some smart people.

There is a nascent "re-understanding" of the symbiotic, though sometimes combative relationship between business and media, but that relationship can only be reborn outside of the realm of Big Business. Small business, especially the technology start-ups, have the most to gain and lose in both the short and long term in supporting, i.e. subsidizing media.

Bottom Line: Small business needs to subsidize free journalism to keep valuations high and to compete in the market against big business. If there is regular discussion in the media of the relative merits of new technologies or innovative approaches to current technology, the investment community and the customer has better reason to invest and try with small business has to offer. That increases sales, attracts potential employees and eases the path to investment.

Earlier this week I recommended the idea of a large group of small companies taking out a single one-page ad in any publication they choose as a way of increasing editorial space and hiring journalists. That's an in-the-box idea. In an out-of-the-box mindset, my corporation has been working for several months to bootstrap a new type of publication that offers direct sponsorship of articles that are shared through a media network. The latter idea is finally gaining some traction thanks to the absolute dearth of mid range news coverage in B2B media.

Embracing either or both of those ideas is a leadership position, but for those who are reluctant to take the plunge, there are other options. TechInsights (the former CMP) has a wide variety of sponsorship and subscription programs that provide support for the media. TechInsights' CEO Paul Miller has spoken of these possibilities in several venues. Extension Media, IB Systems, SOC Central and the RTC Group all have similar outreaches beyond just advertising and all of them support the media for various technical markets.

But partnership is a two-way street. It is not just sending money into media houses that solves the problem. The media houses themselves have to recognize the potential of working with small companies with small budgets and they need to create programs and packages that work within very different constraints than Big Business budgets.

Big Business has retreated into walled fortresses, running audience-captive trade shows, user groups and internal media programs. The B2B media needs to recognize that they now have a major, antagonistic competitor that once was their largest customer. The opportunity to partner with the small businesses in the tech community has the potential for greater profit, growth and innovation.

There is one more issue to be discussed that will open up the future of media and the growth of technology companies. And it rests on the shoulders of the media. But that is the next, and last part of this series.

A glimmer of hope

We've talked for a while about the misconceptions, actions and process that has brought us to our current state of the media and it's been pretty damn depressing. But something is happening out there and I've struggled with how to transition from the doom and gloom of the previous posts to what is happening now. Amazingly enough, it happened at a meeting last night of the Electronic Design Automation Consortium (EDAC). And I have to thank Georgia Marzsalek of Valley PR for insisting that I go.

I've used the EDA industry as an example of bonehead marketing practices that take down an entire industry and the evidence of that was plenteous at this meeting. This is supposed to be the big meeting when the board gets elected for two year. In past meetings, this has been an SRO event with multiple CEO vying for a spot on the board. This year, EDAC was scrambling as late as 24 hours prior to the meeting to get enough CEOs to fill the 9 spots, and three of them came from companies that historically haven't even been considered part of the industry. There were so few people attending you could have tossed a live grenade into the room and had minimal injuries. But two of the board members made "acceptance" speeches that ignited hope in my mind for this faltering industry.

Sanjay Srivastava, president and CEO of Denali Software , got up and said, "We are in a unique moment. The fundamental structure of our industry where large companies have funded trade shows and media, and small companies benefitting from it, is changing. The emerging companies are going to have to step forward and take leadership." Sanjay is the sponsor of the emerging companies committee for EDAC. It was a stunning moment for me to have my words quoted back to me from an industry leader. And it was the beginning of hope that someone would figure this out.

Then Rajeev Madhavan, CEO of Magma stood at the podium and said that the industry "needs to learn communicate better to prove our value to Wall Street." Rajeev sponsors the communications committee and has put Milan Lazich (who I have called one of the last real marketers in the EDA industry) as the committee chair.

I had lunch today with Brian Fuller and shared my thoughts with him. His response:

"Halle-freaking-lujah."

Folks, not only is someone getting it, but they are putting their money where their mouth is.

I'm working on Part 8 this evening and hope to have it posted before you leave work tomorrow. It's a brave new world and it is actually looking pretty good.

Pete Singer jumps to PennWell

Less than a week after leaving his post as EiC at Reed's Semiconductor International, Pete Singer has emerged in the same position at the venerable Solid State Technology at PennWell.

Hooray! We didn't lose a good tech journalist!

Yes, no, maybe.

There were a couple of good comments yesterday that bear discussion. My "partner in crime" Peter V in the UK asked if the reader were partly to blame for the demise of media in the world, and Loring Wirbel points out that part of the problem is bean counters and greet.
We could blame readers for not being willing to pay for media, because the income from the audience has always been inconsequential. But that was, historically, the point of advertising-supported media: The common man could not afford to bear the cost of media.
Up to the late 1700s, print could only be afforded by the wealthy. In fact, even into the mid 1800s a personal library was considered a significant asset that could be borrowed against. Both John Adams and Thomas Jefferson bought themselves out of debt by selling off portions or all of the libraries. Advertising made it possible for common man to afford newspapers.
Fast forward to today. There are lots of magazines that are delivered for free to "qualified" readers. I get about 50 a month and read just about all of them. If they were to start charging me for the honor, I would be down to 5 pretty quickly because I could not afford more. And they probably would not be B2B pubs either. Without large circulation you can't sell the advertising. Without qualified circulation you can't sell advertising.
But the fact is, readers DO support the media because readership and viewership has never been higher. The audience WANTs the content, but lacks the resources to get it. The problem is advertisers WANT to reach the audience but doesn't want to PAY for it. It's a culture of entitlement we're dealing with: I want what I want and I want someone else to pay for what I want.
Could readers pony up? Yes. Would it be enough? Nope. Is there another way? Maybe. But that's another story.
Meanwhile we have Loring pointing out that the VON collapse was a combination of hubris and greed. He points out that VON had 12 conferences worldwide and that was excessive. Yes, voice over network is a killer app, but there are only so many engineers in the world working on it and they can't all be jetting around the world to attend all of them. Either the conference venues had to be cut down or the sheer number of them should have been. A good marketer would have been able to point that out.
But Pulver Media was being run by bean counters who pushed the concept that if one conference was wildly successful then 12 would have been obscenely profitable. Jeff Pulver bought the encouragement and overreached the market.
But technical conferences can be profitable as long as you understand the audience and the limitations. That's why United Business Media continues to pursue them and why Reed isn't planning on selling off their exhibition business.
So can you make money putting on conferences? Yes if you understand marketing. Is the potential profit unlimited? No, all budgets are finite and under assault so do your homework. Is it the best way to reach a technical audience? Maybe, we're all just searching for answers right now.

Wisdom and Ignorance, Part 7: Taking it to the streets

Over the weekend, a surprise announcement in GigaOm.com provided a great example of what we've been talking about. The VON conference and it parent sponsor, Pulver Media (publisher of VON magazine) got the financial rug pulled out from under it as the conference was going on. The investors seized all the accounts and assets after the founder, Jeff Pulver, admitted earlier that the revenue forecasts for his venture were not good at all.

Let's break this down. When Pulver says revenue, that means sponsorship for the publication and conference, which had quickly become the leading conversation point for the Voice over Network/Voice over IP industry.

Think about it. VON/VOIP is supposed to be one of the killer apps of the internet. It's not just about making international phone calls. It also includes video, conference calling, virtual trade shows and seminars. And it didn't pull enough sponsorship to make the effort to report on this industry a profitable exercise.

We're not only seeing the death of B2B media for lack of sponsors, but trade shows as well. Lots of people are reading the publications, and lots of people are still going to trade shows and conferences, but the industry that benefits from this market conversation are not supporting it. Why is that?

I think its because our companies no longer believe in the benefit of free competition. If small and medium businesses have a level playing field to work from, then Big Business has a significant barrier to success in the short term. Even if other companies can take single-digit market share from them, it's a problem to the bottom line.

In past years, Big Business player had three choices in dealing with this pressure. First, make better products and services and obsolete even your technology (this is the path Intel has traditionally chosen). Second, you undersell your smaller competitors and drive them out, which hurts short-term numbers. Third, you buy your competitors out and either bury their technology or replace internal offerings.

But in the last 10 years, Big Business discovered something. They realized that they were the primary source of revenue for the media. When they cut back on the external marketing expenditure, print, broadcast and internet publications cut back editorial staff. Publications got smaller. Editors, columnists and analysts still had the same amount of information to disseminate but not time and resources to publish it. The internet became a place where poorly written news releases were published as the primary form of marketing. That's where we are today. Medium and small business followed the leaders over the past decade and now we have whole publishing companies going under, not just staff reductions.

This is hurting the marketing efforts of large companies, so they are starting to increase external marketing budgets, right? Nope. They are starting a new trend of building up internal marketing with private conferences and publications that they can control… and keep their competitors in their place.

The result is exactly what Big Business wants. Small and medium business competitors are being driven out of business and often taking much lower buy-out evaluations.

But something else has occurred that Big Business didn't anticipate. Whole industries are being devalued in the market because the market is not longer freely discussing or evaluating the product and services. Whole industries are being ignored by the press because, well, no one seems to have anything valuable to say. Plus they aren't advertising.

Industry is in a consolidation phase because they have taken actions that have significantly shrunk the market. Innovation comes from small business. Innovation keeps interest in industries alive. Big business benefits from small business innovation when they can acquire innovation without funding it in total, and by being in vibrant industries that are discussed in the marketplace of ideas… media. By cutting advertising budgets, Big Business has curtailed the innovation engine that keeps their market growing. Companies focusing on their in-house publications and events only talk to people on their own mailing lists; lists that grow ever shorter as their own customers consolidate and lay off staff.

Should Big Business change their practices? I'd rather they didn't. I'd rather they stay in the current state of blissful ignorance while the rest of us get busy changing the playing field. I'd rather an open market revolt against Big Business.

Startups and small business are more fun because they have new ideas. The media actually like talking to innovators, even if they aren't real leaders. But small business has lived off the marketing largess of Big Business far too long. I'm of the opinion that small business needs to replace big business as the support of the media. Small business can't afford large media buys, nor can they afford to put on their own large-scale events, but increasing marketing budgets by a narrow percentage would be enough enough to make a huge unfair competitive advantage over Big Business.

For example, there are approximately 250 EDA companies below the $50 million annual revenue line. If each company bought one page of advertising a year, publications would be able to add around another 250 pages of editorial copy. Spread that around EDN, Electronic Design and EE Times and you have a pretty compelling reason for those publications to increase coverage of the industry. And there is no way that the market leaders in that industry could compete against that kind of coverage.

But that's just one example. Next, we're going to get really radical.

More changes in Reed

Pete Singer has left Semiconductor International and is being replaced by his right hand lady. Laura Peters.

That's some good news for the EDA world. Laura is the Reed expert on DFM. Even writes a column on yield management. Pete was less interested in the EDA side but Laura gets the back end pretty well.

There's no news if this was part of the downsizing at Reed publications, but there has been no replacement named for Laura's role as lead tech editor.

It is noteworthy that in an industry dominated by men, most of the press left to cover semis, from design to manufacturing, are women.

Wisdom and Ignorance, Part 6: The Commies Were Right.

Here's some historical perspective.

Late 1700s. England was draining the American colonies to finance wars with France and Spain destroying the colonies' economy. Result? The colonies rebelled and formed their own country, allied with the French. Shortly after that, a similar revolution occurred in France for essentially the same reason: the wealthy depriving the poor and killing growth.

Fast forward to the early 1900s. The Romanov family sucked the very life out of the people to fund their dynasty, destroying the economy in the process. Same story, same result. The Bolsheviks didn't learn the lesson though and by the late 1900s, with some prodding from Reagan's economic boom, the little people rose up again and took down the elite.

There is something to be learned in all this.

Big Business (referring to companies with more than $100 million in revenue) has always subsidized B2B press. Small Business benefited from the free press supported by Big Business but die little to support media, and for good reason. Small business does not participate in the subsidy because it cannot compete with the advertising budgets of Big Business that the media has always courted. I've heard many times over the past decade that getting an ad sales rep to visiti was like getting an audience with the Pope. And when they did show up, there were no affordable deals to be had.

The B2B media have pretty much ignored small volume advertisers. The conventional wisdom of advertising says that for advertising to be effective you need "multiple impressions." That means you have to buy a bunch of ads, preferably once a month, at least 6 times a year. That kind of cost for something like EE Times can overrun an entire marketing budget of some start-ups. The media answers, "Well, increase the budget." But their board and investors say, "Uh, no." So in general, the media stays away from the small companies

So the media ignores small companies to go after the big advertisers, all of whom are slowly retracting their support. If the media companies could adjust their "conventional wisdom" and get 12 small companies to take out one small ad every year, it would actually provide a better return than one large company buying 12 ads in a year (no volume discounts, afterall.

But getting an advertsing manager (or an ad agency) to agree to that is next to impossible. Why, because the conventional wisdom says that you work less on one large account than you do with 12 small accounts. This is not unlike tech companies that believe there are only 5-10 customers for their business. The media industry is no different than technology companies in the way they do business.

The result of these beliefs and practices is that in this economic downturn, Big Business is turning their marketing investment inward, which downsizes the media, which chokes out competition from startups for the conversation in the market, which kills innovation, which hampers market growth. Think I'm wrong?

Sam Whitmore just finished a survey of the media about trends in coverage. What he found was more in-depth pieces by teams, not single journalists, more short pieces (news release rewrites) and blogs. The media has stopped covering regular business news because they no longer have the resources to do it. In the meantime, Big Business is building separate media worlds. In our last post, we reported that Mike Santarini (formerly of EE Times and then EDN) landed as the editor of Xilinx's in house pub, Xcell. Cisco is buying pages of Computer World and running their own content. Mentor Graphics has been doing this for years in EDA Tech Forum.

The economics of our time is slowly squeezing out the small company. Getting a B2B editor to cover the news of a small start-up is virtually impossible now. Like the Brits of 1776, The Bourbons of 1780, and the Romanovs of the 1900s, Big Business is closing the doors of the market. It is affecting the economy adversely and the media structure doesn't know what to do about it.

And we're going to need a bottom-up revolution to fix it. That's next.